7 Things You Must Know To Trade Pivot Points In 2017

So you want to know how to trade pivot points? A pivot point is a leading indicator for all markets. Learning how to trade pivot points is not at all a rocket science. The first thing you must practise in pivot point trading is to be patient with yourself.

Be bold in trading but the boldness must be calculative. There are bold traders and there are old traders, but there are no old bold traders. One thing you must note pivot point trading is not a get rich quick scheme, it is a regular earning process. Trading pivot points are in fact a great way of improving your trades.

Pivot Point Calculation

You can use last trading days open, high, low and close values to get next days floor pivot values. But thanks to technology. Now almost every charting platforms come with floor pivots. Floor pivots are the most popular pivots used in cash, futures and commodities markets. Floor pivots are calculated in advance as predictive support and resistance levels from where the market can reverse back. The primary pivot point (PP) is the point where the market changes between bullish to bearish. The support and resistance levels are the predictive targets or bounce back points. Check the image below:

A picture is worth 1000 words

Daily floor pivots were originally calculated by pit traders to predict intraday turning points. So, how to trade pivot points as a strategy – my 7 point guide to trading pivot points:

Use a 15 minutes chart for intraday.

Use pivot points as support or resistance.

In some cases, the trader uses pivot point as an entry point when the price is able to break through the pivot.

In other cases bounce from pivot point is considered as an entry in counter-trend trade.

In both cases, the trader needs confirmation from the momentum indicators.

Also for you, we have a ready-made pivot point calculator. Where you just need to put previous trading days open, high, low and close to get next trading days pivot levels. You can access this pivot point calculator

Indrajit is a professional blogger and trading system developer. Amibroker expert, WordPress expert, SEO expert and stock market analyst.Trading since 2002, he has started the journey of StockManiacs.net on 2008. He follows Indian and world stock markets closely.